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Holdover drawback?

15 June 2010
Issue: 4259 / Categories: Forum & Feedback
In 1999, a shareholder transferred his shares to a trust and claimed retirement and hold-over relief. The trustees can transfer shares to the son of the original shareholder and the capital gain can be held over

In 1999 our client transferred his 99% holding in a trading company to an interest in possession trust to take advantage of capital gains tax retirement relief. A holdover relief claim was made in case the gain exceeded retirement relief although no valuations were actually prepared.

Can readers please advise on the following points?

First our client has gifted 10% of the shares to his son who is also a full-time director of the company. Can the trust make a hold-over election to avoid capital gains tax on the gift?

Second would the son’s acquisition cost then be the amount of retirement relief obtained in 1999?

Third if our client dies we understand that the held-over gain for the shares still in the trust can in certain circumstances be subject to...

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